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How do I define good general conditions? (Minimum order value, payment terms, etc.)
How do I define good general conditions? (Minimum order value, payment terms, etc.)
Luisa avatar
Written by Luisa
Updated over a week ago

In addition to shipping costs, it is also essential to set general conditions so that the potential customer knows directly what a deal with you would look like.

Minimum Orders

With minimum order values, it is important to keep the balance between 2 major parts:

  1. What order quantity makes it attractive for me to be able to offer my products at wholesale price?

  2. What order quantity is suitable for new shops and makes you appear attractive?

In order to determine a suitable minimum order value, one should consider the following points:

  • What is the average purchase price of my products?

  • How many different products do I offer in total?

  • How many different products should the shop buy in order to present my products well?

  • Do my products come in different sizes and/or colors?

  • Are my products made to order? Do I need a certain quantity to be able to produce at all?

  • Do I offer display materials that accommodate a certain quantity of my products?

Please keep in mind that a new customer may want to test your products first and place a smaller order to start with. Accordingly, minimum order quantities that are too high can have a deterrent effect. However, it is possible to set different minimum order quantities for first orders and reorders.

In general, it might also be an interesting idea to combine the minimum order quantity with your shipping costs. You can e.g. work without a minimum order but offer free shipping for orders which have a particular value. By doing so, you can label yourself as a brand that has minimum order (which might appear very attractive for shop owners) but still make sure that shops order higher quantities.

Terms of payment

You should also think about payment terms in advance. Although this will probably not influence the shop's decision to buy, attractive payment terms can possibly lead to a higher-order amount and/or a quicker decision.

The following things need to be defined:

What payment options do I want to offer?

Can the shop only pay me by bank transfer? Transferring money to a foreign account is sometimes associated with high fees. Fees that the shop should rather pay to you in order to buy more products. Is it possible to pay by PayPal, for example?

In addition, an installment payment can increase the shopping basket. If there is the possibility to split the payment, this can significantly increase the order volume because it decreases the risk for the shop. There are various providers for this who will take over the claim. This way you get paid the full amount immediately, but the shop pays for the goods in installments.

There is a similar thing with factoring. If you give the shop a payment deadline of 30 days, but for cash flow reasons you would rather have the amount credited immediately, you can simply outsource the invoice. There are also various providers who will pay you the full amount immediately. The shop then pays the provider with a payment term.

What is the payment deadline?

Of course, it's nice to receive payments immediately - cash flow is especially important for small brands. But cash flow is also something important for shops. In order to make payment more attractive for the shops, think about whether it is also possible to set a payment period of 30 days, for example. Or charging 50% at the time of the order and 50% afterward.

Here again, it makes sense to keep in mind: Are your products made to order? Do you need the money to be able to produce? Again, it is perfectly possible to set different payment terms for first orders and reorders.

Other conditions

Finally, you can think about what conditions could be an additional plus for the shop:

  • If your products are to be tested by customers in the shop: Do you have the possibility to send along testers?

  • Can you offer your customers marketing material/displays? Does this cost extra or do you offer it for free for a better brand representation?

  • Are there any specials above a certain order value? Are the prices clustered? Can you offer discounts (especially in difficult times or when shops reorder)?

  • How are returns handled? Do you offer the possibility to return products if they don't sell well? If so, under which conditions (e.g. must be placed in the shop for a certain period of days without any sales to end consumers, etc.)? And how is the process if the products appear damaged in the shop? Setting clear and fair conditions helps in this case to avoid frustration on the customer side, which might have a negative impact on the cooperation in the long run.

  • Can you offer your products on Commission? If so, how are the sales tracked? How is the payment handled once a product is sold (directly, monthly, quarterly, etc.)?

  • Can you offer faster shipping in certain periods (e.g. if you are rather late for the wholesale Christmas season)? How long will the delivery take in general and how is it handled?

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